This week we had an update of the deposits at the European banks. Deposit outflows continue. What strikes me most is that we see inflows to safer countries (Netherlands, Germany, France) and outflows of the periphery (Italy, Greece, Ireland).
Most curiously, the largest deposit outflow can be seen in Greece (red chart). We peaked out in Greece deposits after a series of bailouts starting in 2010. Ever since the debt restructuring in 2012, the deposits kept going down, which collapsed the trade credit.
As a result, (especially) imports and even exports are collapsing. This is the way of restructuring. Bailouts in 2010 strengthened exports. Restructuring of debt starts in 2012, bailouts are gone, exports collapse.
And the best thing is, the debt hasn't gone away, it's all there.
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